Anthropic's push toward a potentially record-setting initial public offering faces fresh obstacles after quarterly reports from Microsoft, Google and Amazon intensified concerns about the cost of expanding artificial intelligence infrastructure. The results arrived days after Anthropic released its prospectus on Monday, putting the financial strength of its major partners under greater scrutiny ahead of an expected offering in the coming weeks.
The prospectus already presented investors with substantial risks to weigh. Anthropic disclosed an $80 billion net loss for the first half of the year, compute commitments worth hundreds of billions of dollars and more than 90 pages of risk factors. Its third-quarter financial results have yet to be released. Daniel Newman, CEO of Futurum Group, told CNBC on Friday that the latest earnings reports had added doubts about capital structure to the challenges facing the market.
Concerns had previously centered on neocloud operators such as CoreWeave and Nebius, which face higher borrowing costs and a shortage of lenders while pursuing ambitious AI expansion plans. Anthropic obtains much of its computing capacity from Amazon, Google and SpaceX, but also uses neocloud providers. The uncertainty has spread across the broader AI market, with investors questioning how technological advances will translate into sustainable businesses.
Technology shares ended the week under pressure. The Nasdaq Composite fell 2.9% on Friday, completing its first three-week losing streak since March. Nvidia and the wider semiconductor sector also declined after a weak Intel forecast sent that company's shares to their sharpest drop since the 1970s. In a Thursday note, BTIG managing director Jonathan Krinsky said weakness across technology had become too widespread for investors to overlook.
Spending disclosures from the biggest cloud companies added to the unease. Microsoft reduced its annual capital expenditure forecast from $175 billion to $170 billion. Alphabet retained guidance of up to $205 billion, while Amazon reaffirmed its forecast of roughly $220 billion. All three reported capital spending figures or forecasts below analysts' expectations.
Their cash positions also drew attention. Amazon posted negative free cash flow for a second consecutive quarter, with a $42.4 billion outflow over the trailing 12 months. Google reported negative free cash flow of $9.1 billion, contributing to a nearly 13% share-price decline on Thursday, its worst day ever. Microsoft's free cash flow remained positive at $18.6 billion but fell significantly for a second straight quarter. It announced plans Thursday to raise $25 billion through bonds to help fund infrastructure expansion.
Demand nevertheless remains a source of support for Anthropic. Cloud growth at Microsoft, Google and Amazon exceeded analysts' estimates, and Google's cloud revenue more than doubled from a year earlier. Oracle said Wednesday that it would cap additional fundraising in the coming years at $20 billion and expected to become cash flow positive in the second half of its next fiscal year.
Anthropic is also approaching a subdued IPO market. Since SpaceX's record June offering, Oura, Firmus and Solidigm have postponed or abandoned listing plans. Nscale and SB Energy have gone weeks without prospectus updates. Newman pointed to Anthropic's disclosed 1,300% annual sales growth, 900% net revenue retention and implied 85% gross margin as attractions for investors. Its roadshow will also bring scrutiny of its dependence on cloud partners that are among its largest investors. Anthropic did not immediately respond to a request for comment.
